US STOCKS-Wall St dips as FedEx issues profit warning; all eyes on Fed

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* Fed policy decision expected at 2:00 p.m. ET
* FedEx tumbles after profit warning; drags down UPS shares
* Adobe down after tepid revenue forecast
* Indexes down: Dow 0.22%, S&P 0.27%, Nasdaq 0.33%

(Adds comment, details; updates prices)
By Medha Singh and Ambar Warrick
Sept 18 (Reuters) - U.S. stocks came under pressure on
Wednesday after a profit warning by FedEx, while investors
waited for a decision on interest rates and clues on the future
of U.S. monetary policy from the Federal Reserve.
Shares of the package delivery company FDX.N tumbled 14%
and were on course for their sharpest one-day percentage drop
since the financial crisis after FedEx blamed U.S.-China trade
tensions and a split with Amazon.com Inc AMZN.O for its dismal
full-year profit forecast. The stock was the biggest drag on the S&P 500 .SPX and
drove a 1.9% drop in shares of rival United Parcel Service Inc
UPS.N .
The Dow Jones Transport Average .DJT lost 1.78%, while the
broader industrial sector .SPLRCI was off 0.7%. The sector was
the biggest decliner among eight of the 11 major S&P sectors in
the red.
Investors are now waiting for the Fed's policy statement,
due at 2:00 p.m. ET (1800 GMT), followed by Chair Jerome
Powell's address a half hour later.
The central bank is expected to lower interest rates by a
quarter percentage point for the second time in three months,
but a deep divide among policymakers has led traders to abandon
all bets on a third reduction this year.
"The market is likely seeking confirmation from the Fed that
the cuts in July and likely this afternoon are not simply a
mid-cycle adjustment and that the FOMC stands ready to take
aggressive action if needed," said Ryan Larson, head of equity
trading at RBC Global Asset Management in Chicago.
Earlier in the day, the central bank injected more cash into
the banking system as the key interest rate pierced above its
targeted range for the first time since the financial crisis.
That puts pressure on policymakers to come up with long-term
fixes for the funding squeeze. In response, trader bets for a 25 basis point reduction in
interest rates shot back up to 72.7% after falling to nearly 50%
on Tuesday, according to CME Group's FedWatch tool.
The interest-rate sensitive banking index .SXPBK slipped
0.49% and was on pace for a third day of losses.
Expectations of lower rates have spurred a Wall Street rally
this year, with the benchmark S&P 500 .SPX now about 1% below
its all-time high hit in July.
At 11:25 a.m. ET, the Dow Jones Industrial Average .DJI
was down 60.42 points, or 0.22%, at 27,050.38, the S&P 500
.SPX was down 8.17 points, or 0.27%, at 2,997.53. The Nasdaq
Composite .IXIC was down 26.96 points, or 0.33%, at 8,159.06.
Adobe Inc ADBE.O fell 2.3% after the Photoshop software
maker forecast tepid revenue for the current quarter.
In a bright spot, Versace-owner Capri Holdings Ltd CPRI.N
rose 2% as Jefferies raised its price target on the stock.
Declining issues outnumbered advancers for a 1.47-to-1
ratio on the NYSE and a 1.84-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and one new low,
while the Nasdaq recorded 31 new highs and 22 new lows.